1-1

Overview of StatisticsOverview of Statistics

What is Statistics?

Why Study Statistics?

Uses of Statistics

Statistical ChallengesStatistical Challenges

Writing and Presenting ReportsWriting and Presenting Reports

Statistical PitfallsStatistical Pitfalls

Statistics: An Evolving FieldStatistics: An Evolving Field

Chapter1111

McGraw-Hill/Irwin © 2008 The McGraw-Hill Companies, Inc. All rights reserved.

1-3

What is Statistics?What is Statistics?

• StatisticsStatistics is the science of collecting, organizing, is the science of collecting, organizing,analyzing, interpreting, and presenting data.analyzing, interpreting, and presenting data.

• A A statisticstatistic is a single measure (number) used to is a single measure (number) used to summarize a sample data set. For example, the summarize a sample data set. For example, the average height of students in this class.average height of students in this class.

• AA statisticianstatistician is an expert with at least a master’s is an expert with at least a master’s degree in mathematics or statistics or a trained degree in mathematics or statistics or a trained professional in a related field.professional in a related field.

McGraw-Hill/Irwin © 2008 The McGraw-Hill Companies, Inc. All rights reserved.

1-4

Why Study Statistics?Why Study Statistics?

CommunicationCommunication

Computer SkillsComputer Skills

• Understanding the language of statistics facilitates Understanding the language of statistics facilitates communication and improves problem solving.communication and improves problem solving.

• The use of spreadsheets for data analysis and word The use of spreadsheets for data analysis and word processors or presentation software for reports processors or presentation software for reports improves upon your existing skills.improves upon your existing skills.

1-5

Why Study Statistics?Why Study Statistics?

Information ManagementInformation Management

Technical LiteracyTechnical Literacy

• Statistics help summarize large amounts of data Statistics help summarize large amounts of data and reveal underlying relationships.and reveal underlying relationships.

• Career opportunities are in growth industries propelled Career opportunities are in growth industries propelled by advanced technology. The use of statistical by advanced technology. The use of statistical software increases your technical literacy.software increases your technical literacy.

1-6

Why Study Statistics?Why Study Statistics?

Career AdvancementCareer Advancement

Quality ImprovementQuality Improvement

• Statistical literacy can enhance your career mobility.Statistical literacy can enhance your career mobility.

• Statistics helps firms oversee their suppliers, Statistics helps firms oversee their suppliers, monitor their internal operations and identify monitor their internal operations and identify problems.problems.

1-7

Uses of StatisticsUses of Statistics

Two primary uses for statistics:Two primary uses for statistics:• Descriptive statisticsDescriptive statistics – the collection, organization, – the collection, organization,

presentation and summary of data.presentation and summary of data.

• Inferential statisticsInferential statistics – generalizing from a sample – generalizing from a sample to a population, estimating unknown parameters, to a population, estimating unknown parameters, drawing conclusions, making decisions.drawing conclusions, making decisions.

1-8

Uses of StatisticsUses of Statistics

Overview of Statistics Overview of Statistics

StatisticsStatistics

Describing Describing DataData

Making InferencesMaking Inferencesfrom Samplesfrom Samples

VisualVisualDisplaysDisplays

NumericalNumericalSummariesSummaries

EstimatingEstimatingParametersParameters

TestingTestingHypothesesHypotheses

1-9

Uses of StatisticsUses of Statistics

AuditingAuditing

MarketingMarketing

• Sample from over 12,000 invoices to estimate the Sample from over 12,000 invoices to estimate the proportion of incorrectly paid invoices.proportion of incorrectly paid invoices.

• Identify likely repeat customers for Amazon.com Identify likely repeat customers for Amazon.com and suggests co-marketing opportunities based and suggests co-marketing opportunities based on a database of 5 million Internet purchases.on a database of 5 million Internet purchases.

1-10

Uses of StatisticsUses of Statistics

Health CareHealth Care

PurchasingPurchasing

• Evaluate 100 incoming patients using a 42-item Evaluate 100 incoming patients using a 42-item physical and mental assessment questionnaire.physical and mental assessment questionnaire.

• Determine the defect rate of a shipment and Determine the defect rate of a shipment and whether that rate has changed significantly over whether that rate has changed significantly over time.time.

1-11

Uses of StatisticsUses of Statistics

MedicineMedicine

ForecastingForecasting

• Determine whether a new drug is really better than the Determine whether a new drug is really better than the placebo or if the difference is due to chance.placebo or if the difference is due to chance.

• Manage inventory by forecasting consumer Manage inventory by forecasting consumer demand.demand.

1-12

Statistical ChallengesStatistical Challenges

Working with Imperfect DataWorking with Imperfect Data

Dealing with Practical ConstraintsDealing with Practical Constraints

• State any assumptions and limitations and use generally State any assumptions and limitations and use generally accepted statistical tests to detect unusual data points or to accepted statistical tests to detect unusual data points or to deal with missing data.deal with missing data.

• You will face constraints on the type and quantity You will face constraints on the type and quantity of data you can collect.of data you can collect.

1-13

Statistical ChallengesStatistical Challenges

Upholding Ethical StandardsUpholding Ethical Standards

Using ConsultantsUsing Consultants

• Know and follow accepted procedures, maintain Know and follow accepted procedures, maintain data integrity, carry out accurate calculations, data integrity, carry out accurate calculations, report procedures, protect confidentiality, cite report procedures, protect confidentiality, cite sources and financial support.sources and financial support.

• Hire consultants at the Hire consultants at the beginningbeginning of the project, of the project, when your team lacks certain skills or when an when your team lacks certain skills or when an unbiased or informed view is needed.unbiased or informed view is needed.

1-14

Statistical PitfallsStatistical Pitfalls

Pitfall 1: Making Conclusions about a LargePitfall 1: Making Conclusions about a Large Population from a Small Sample Population from a Small Sample

Pitfall 2: Making Conclusions fromPitfall 2: Making Conclusions from Nonrandom Samples Nonrandom Samples

• Be careful about making generalizations from Be careful about making generalizations from small samples (e.g., a group of 10 patients).small samples (e.g., a group of 10 patients).

• Be careful about making generalizations from Be careful about making generalizations from retrospective studies of special groups (e.g., retrospective studies of special groups (e.g., heart attack patients).heart attack patients).

1-15

Statistical PitfallsStatistical Pitfalls

Pitfall 7: Unconscious BiasPitfall 7: Unconscious Bias

Pitfall 8: Attaching Practical Importance to Pitfall 8: Attaching Practical Importance to Every Statistically Significant Study Result Every Statistically Significant Study Result

• Be careful about unconsciously or subtly allowing bias to Be careful about unconsciously or subtly allowing bias to color handling of data (e.g., heart disease in men vs. color handling of data (e.g., heart disease in men vs. women).women).

• Statistically significant effects may lack practical Statistically significant effects may lack practical importance (e.g., Austrian military recruits born in the importance (e.g., Austrian military recruits born in the spring average 0.6 cm taller than those born in the fall).spring average 0.6 cm taller than those born in the fall).